The transformation of pension plan design, the presence of five generations in the workforce and an increasing reliance on technology are all hallmarks of an evolving workplace. With each person’s savings journey as bespoke as a tailored suit, how can employers fit capital accumulation plans into their overall financial wellness strategies to ensure employees are making the right savings decisions at the right time?

In its case, CAA Club Group has created a financial wellness strategy that aligns with employees’ career and life journeys, recognizing savings goals will be different at every stage. Earlier on, for example, their priorities may include paying off debts from post-secondary education or buying a home. Next, they may look to open a registered education savings plan for their children or prepare a will. And those at or nearing retirement will be the groups most interested in learning about the company’s pension offering, as well as the Canada Pension Plan and old-age security benefits.

“For me, the biggest [issue] is the education and understanding what the different types of plans can do for you at your different life cycles or career cycles,” says Mary Duncan, the organization’s chief human resources officer.

CAA offers employees three options: a defined contribution pension with matching employer contributions, a voluntary registered retirement savings plan and a tax-free savings account, which employees can contribute to via payroll deduction. “We want to ensure we provide that adequate level of retirement income but also provide them with education and tools so they can make choices,” says Duncan.

Broadening the savings picture

As the makeup of the workforce evolves, it’s becoming even more obvious that there isn’t a one-size-fits-all approach to workplace savings plans. So what’s the answer? A concept of financial wellness that looks beyond pension plans and retirement adequacy to create a holistic picture of all savings priorities is one possibility.

“If I were an employee, what would my short-term goals, my mid-term goals and then my long-term goals look like?” says Jillian Kennedy, leader of Canadian defined contribution and financial wellness at Mercer. Plan design and education that promote complete financial wellness, she adds, could include topics like paying down debt, managing short-term savings for vacations and possible leaves of absence and then, ultimately, saving for retirement.

“We have more contingent workers, we have people coming in at different times during their career, and so people are looking at benefits that correspond to the value they bring to their employment,” she says. “And so, can you imagine an employee walking around telling their friends, ‘I worked at this company and they helped me pay down my mortgage?’ So that’s why financial wellness is really important.”

A robust financial wellness strategy can position different savings plans for a variety of goals, according to Kennedy. “If I can’t afford a home, I have an RRSP,” she says, referring to the government’s first-time homebuyer’s plan, which allows people to withdraw up to $25,000 from an RRSP without tax penalties on the condition that they’re putting it towards a down payment.

“If I’m looking to have short-term savings or supplement my income or I’m managing debt, a TFSA is perfect because you’re not going to have to worry about how you invest,” she adds. “If I hit my tax limits and I don’t have any way of continuing to accumulate savings, I have a non-registered plan where contribution limits don’t matter. And if you start to put them all together, they actually start to make a lot more sense.”

The growth of TFSAs
When Statistics Canada published its latest census figures this year, the numbers showed 40 per cent of households had contributed to a TFSA in 2015. That number was higher than the percentage that contributed to an RRSP or a registered pension plan. While TFSAs have traditionally been the purview of the retail market, employers are recognizing that they also have a role in the workplace.

“I think companies have always been interested in TFSAs; they just didn’t know how it fit within the structure,” says Kennedy.

“You can see, if I have a pension plan, adding a TFSA would be extremely complicated. I wouldn’t know how it fit; I wouldn’t know how to communicate it; I might even be worried about money that should have gone into a pension and instead is being diluted over here in this TFSA. But I think plan sponsors are embracing the concept of financial wellness and helping employees supplement savings.”

Renée Laflamme, executive vice-president of group benefits and retirement solutions at Industrial Alliance Insurance and Financial Services Inc., notes that while she has seen growth in group TFSAs, their relevance as savings vehicles for employees will depend on their priorities. “If you are 32 and have two kids, you may not have that money for your TFSA,” she says. “If you’re heading into an older age — 40s, beginning 50s — you may have more awareness of the importance of savings. Employers are looking more and more at TFSAs and saying, ‘We need to make sure people are aware that it exists and what it does for them.’”

A focus on technology, personalization
In the absence of a single savings option for all employees, suppliers of capital accumulation plans are providing technology platforms that allow employers to combine all of their offerings in one place, says Christine van Staden, regional vice-president of the Toronto consultant office at Great-West Life Assurance Co.

The insurance company’s product, though predominantly focused on retirement planning, also combines elements of education to personalize the savings journey for every employee. It uses data analytics to target each member’s individual circumstances, rather than sending out generic questions about whether a portfolio is appropriately balanced, says van Staden.

“We’ll know that with the data now and we’ll be able to say, ‘You might want to revisit the balance of your portfolio.’ It’s getting the right messages to that particular member based on their particular experience and where they stand,” she says, noting the approach will help members set realistic goals.

At CAA Club Group, employees don’t yet have a single place to see all of their plans, but it’s a direction the company would like to head in. “That would be the ideal,” says Duncan. Employees already receive personalized pension communications, she adds. “It actually says, ‘This is what it looks like; here are some options on your flex plan; here’s how you can contribute; here’s the projection.’ And it’s simple material and it’s easy to understand, so the pension part is customized.”

At iA Financial Group, the provider uses its own data to personalize its platform for employees, whether they’re in the accumulation or decumulation phase of retirement savings. In the accumulation phase, for example, it sends members personalized notifications to prompt them to take action, such as increasing contributions when they’ve received a raise.

“What we call digital strategy seems very wide, but at the end of the day, what it means is getting quicker, faster, easier access to the information so that people can react . . . and provide them action items to actually act on,” says Laflamme.

Indeed, through those types of platforms, providers can ensure greater personalization and customization for plan members, which ultimately creates a more interactive experience, says van Staden.

And the simpler and more direct the plan design is, the easier it is for employers to get the right message to the right member, says van Staden. “The more complex anything is in this world, the more you find you’re going to get lost in trying to get any fundamental, well-rounded messaging to support anyone in any capacity. It doesn’t matter what the subject is. Complexity ultimately results in confusion.”